Considered in Grand Committee
My Lords, the Government are committed to providing an environment for all sectors of the economy in which private enterprise and businesses can flourish. A key objective is to simplify employment legislation and remove unnecessary burdens from businesses. As part of this, the Government have taken forward legislation through the Enterprise and Regulatory Reform Act 2013 to end the separate agricultural minimum wage regime in England and Wales and to bring employment in agriculture into line with other sectors of the economy.
The amendments which the Government are proposing to the Working Time Regulations 1998 are a necessary consequence of the abolition of the Agricultural Wages Board for England and Wales on 25 June 2013 and the end of the separate agricultural minimum wage regime after 30 September 2013. Agricultural workers are already protected by the main provisions of the Working Time Regulations, including those relating to the maximum 48 hour week. However, some minor technical amendments are needed to align the position for agricultural workers in England and Wales fully under the regulations with that of workers in other sectors of the economy. If approved, these amendments will come into force on 1 October 2013, when the current special regulatory framework for agricultural minimum wages will end.
The proposed amendments will remove some very specific exemptions in the 1998 regulations which apply only to workers employed in agriculture. These are in relation to the date of the commencement of the leave year and the arrangements for giving notice to take leave. Under the Working Time Regulations, the leave year for a worker begins on the date provided for in a relevant agreement. Where there is no provision in a relevant agreement, the date of commencement of the leave year for a new employee is the date or anniversary of the date of commencement of employment. For agricultural workers in England and Wales, the commencement of the leave year is governed by the provisions of the Agricultural Wages (England and Wales) Order 2012, which will remain in force until 1 October. The order requires that the leave year for all agricultural workers begins on 1 October. There are also specific arrangements in the Working Time Regulations for taking leave which require workers to give their employer advance notice of the intention to take leave and for the employer to give similar notice if either they require the worker to take leave or do not agree to a request for leave from the worker. These arrangements provide transparency and certainty for workers and employers, but do not currently apply to agricultural workers.
If approved, these amendments mean that where agricultural workers in England and Wales come into the industry and enter into employment contracts after 30 September, the arrangements in respect of commencement of the leave year and for leave-taking will be brought in line with the arrangements for other workers under the 1998 regulations. For agricultural workers already employed before 1 October, their existing arrangements will remain in place until the end of their current employment. This will ensure that there is no risk of loss of annual leave entitlement for agricultural workers during a period of employment. Any agricultural worker who is employed between now and 1 October must still be treated in accordance with the full terms and conditions set out in the agricultural wages order 2012. A worker in this position will similarly retain the arrangements for commencement of the leave year and leave-taking as provided for under the order until the end of their current employment.
If these amendments to the Working Time Regulations 1998 are not approved, once the agricultural wages order 2012 ceases to be in force after 30 September this year, there would be no default position for commencement of the leave year, nor arrangements for giving notice to take leave for new agricultural workers coming into the industry after that date. This could cause uncertainty and confusion for both agricultural workers and their employers.
It may be helpful here to say something more generally about the proposed application of the Working Time Regulations to agricultural workers after 30 September 2013. From 1 October, all new workers coming into the industry in England and Wales will be protected by the National Minimum Wage Act and the Working Time Regulations, as are other workers in different sectors of the economy. This means that agricultural workers will be entitled to at least the minimum requirements for annual leave entitlement and length of rest breaks as provided for by the 1998 regulations, although we would expect that many employers will agree terms which are more favourable to their workers than the minima set in the legislation.
Currently, under the terms of the agricultural wages order 2012, agricultural workers have enhanced entitlements for annual leave and rest breaks. The Government have made very clear during debates in Parliament on the amendment to the Enterprise and Regulatory Reform Act to abolish the agricultural wages board that agricultural workers will retain any existing contractual rights, including relating to leave and rest breaks. This has been enshrined in the relevant secondary legislation abolishing the board and the agricultural minimum wage regime.
Therefore, let me reassure noble Lords that the amendments we are now proposing to the Working Time Regulations will not have any impact on these existing contractual rights. Workers with pre-existing contracts at 1 October 2013 will retain the right to the annual leave entitlement and length of rest break determined in their contract of employment, unless either they agree with their employer to vary their contract or the contract comes to an end. These amendments are a necessary tidying-up exercise as the result of the abolition of the agricultural wages board and the agricultural minimum wage regime. Without them, for agricultural workers who take up new employment on or after 1 October 2013, there would be legal uncertainty and no clear provision as to the arrangements for the commencement of their leave year and leave-taking. I hope that your Lordships will accept these regulations.
My Lords, the noble Lord, Lord De Mauley, might be pleased to hear that I will not remove my jacket.
I have vehemently opposed the whole principle in relation to the agricultural wages board. I am not in essence opposing the provision today because, as the noble Lord said, it is a logical tidying-up measure. However, serious questions arise about its timing and the way in which it has been introduced. He will recall that during the passage of the Enterprise and Regulatory Reform Act there were arguments about the impact assessment produced by the Government at that stage, which Ministers in effect discounted and put to one side. To some extent the Minister has repeated that today. That impact assessment produced for Defra showed a total detriment to agricultural workers of about £250 million over 10 years and a consequential benefit to farmers from that saving in their wages bill. I argued at the time that that was a notional benefit to farmers since, in effect, most of it would end up in the pockets of the supermarkets. Nevertheless, that was the Government’s argument at the time. During the course of deliberations, they disavowed that whole impact assessment.
The noble Lord has repeated today that many employers will improve the terms and conditions of agricultural workers. That, however, is totally contrary to the best expert advice available to the ministry at the time that the amendment to the Enterprise and Regulatory Reform Act was put through. In relation to limits on hours, I suspect there is not a big detriment. There may even be a benefit. However, we do not have another impact assessment. We do not have any indication of there being any analysis by the department as to which way that would work.
Obviously, the Government’s logic is to bring everything in line with general minimum terms and conditions legislation, whether in terms of the minimum wage Act or the working time directive and the legislation stemming from that. I think that that is logical. However, it is perhaps also interesting that Regulation 3 of this very short instrument enshrines the Government’s view that the conditions of the existing workforce, or those who are taken on before 1 October, will not be changed by this enactment. That is, of course, legally correct. However, the current terms and conditions will remain in place only until they are altered, until the employer gives notice of the end of their terms and conditions.
The totality of the Government’s approach here is to change the balance of power between the employee in the agricultural sector and the farmer or other employer. It is hardly worth the paper that it is written on to say that existing terms and conditions will continue to apply to those who are already in the workforce. It may take a few months or a few years for that to change. One of the reasons that the impact assessment was ultimately rejected by Ministers on the Floor of the House was that they recognised there would be a significant disbenefit to workers in the industry: not only new workers but existing workers would be faced with the likelihood of their terms and conditions being changed once the agricultural wages board disappears.
I think the Minister is probably right that this is relatively straightforward and unlikely to cause huge detriment. It is nevertheless part of the overall principle that we have opposed from these Benches. It is part of the attitude towards wages within the agricultural sector that this is being done without any meaningful underpinning even of the terms and conditions of people who are already in the industry.
Having said that, my main concern about the timing of this relates to the way in which it was written. It continues to provide for Scotland to be excluded from this measure because Scotland has always had its own agricultural wages board and still does. That means that it applies in England and Wales. Only last week, however, the Welsh Assembly passed legislation to establish a statutory body within Wales which would have the possibility of retaining the statutory force both of the substance and of the enforcement of the agricultural wages board. There would, therefore, be a new agricultural wages board for Wales.
Surely it would be more sensible to wait to introduce any consequential statutory instruments until it was clear how they would in theory apply to Wales—until it is clear how that new Welsh structure will evolve. The original proposition from Wales was that the legislation would not apply to Wales. They were, therefore, broadly content that the previous way in which the AWB had applied to the Welsh farming workforce would continue. However, we are now chipping away at that for workers in Wales as far as working time is concerned. That shows a serious disrespect for devolution, for the position of the Welsh Assembly and for the attitude that has been taken by the Welsh farming industry and the workers within it.
The timing—less than a week after Wales passed a clear indication that it did not want the changes to apply there—is, to say the least, unfortunate. I hope that the Minister will give us some guarantee that he has consulted with his Welsh colleagues and that this will not apply immediately to Wales, if it is still in the process of establishing its own statutory board as of 1 October.
My Lords, as we have heard from my noble friend, we are returning to what is, for us on this side of the Committee, the vexed question of the abolition of the agricultural wages board, which we have consistently opposed. In opening, the Minister implied that the agricultural wages board was all about the minimum wage for farm workers. It is worth reminding the Committee at the outset, by way of clarification, that it is about so much more than just the minimum wage. This is doing away with a whole wage structure, training, regulations and measures in respect of accommodation and farm dogs, and all sorts of other things.
My noble friend Lord Whitty talked about the timing. I will return to the issue of Wales in a moment, but this also follows yesterday’s Tolpuddle festival—an occasion on which, in beautiful sunny Dorset, we remember the Tolpuddle Martyrs. In 1834, George Loveless, James Loveless, James Hammett, James Brine, Thomas Standfield and Thomas’s son John were all charged with having taken an illegal oath and then transported to Australia. That was the basis of the formation of the trade union movement in many ways and is rightly celebrated every year at Tolpuddle, when those martyrs are remembered.
My noble friend was right to probe the lack of an impact assessment. At the time, we kept returning to the impact assessment for the legislation which abolished the agricultural wages board, and we will keep reminding people that 150,000 workers are affected by the abolition of the board and that £240 million will be taken out of farm workers’ pockets. I know that that is contested by the Government, but they did not take advantage of this opportunity to publish any kind of impact assessment on these regulations to repair that.
I also want to comment on the implications for existing terms and conditions for individual employees. The abolition of the agricultural wages order largely protects existing employees engaged prior to 1 October 2013 with no specific contractual provisions. However, I note an article in Farming UK dated 26 June which quotes Colin Hall, a partner at BTF Partnership and a director of the 50 Club Horticultural Employers’ Association, as saying:
“For others, however, such as those more recently employed with a specific contractual provision reserving the employer’s right to amend their contractual terms following abolition of the AWO, or those employed on or after 1 October 2013, the implications are greater.”
There may be some currently employed workers who have particular contractual provisions who will be affected by these changes. I would be interested to hear from the Minister whether he and his department are planning on working with agricultural employers and advising them on their new obligations as employers following the abolition of the board and the bringing into force of the regulations that we are debating today.
The Minister may have seen the article in Farmers’ Weekly on 11 July—I know that he is a keen listener to “Farming Today”, and I am sure that he is as assiduous in reading Farmers’ Weekly—about Peter Bailey, who was employed as a tractor driver and stockman in Berkshire for more than 22 years. He was awarded £38,000 for underpayment of wages after working an average 55-hour week at a farm there. Defra took up the case with the board and in the end Mr Bailey was able, through a tribunal, to prove that he was being exploited, not getting the pay he was entitled to and forced to work more hours than he should have, and that his employer was at fault. The tribunal found against the employer. That was a contravention of the old agricultural wages order but demonstrates that some farmers struggle to put existing employment regulations into proper effect. As things change, it is a particularly vulnerable time for employers. We need to ensure that they are properly advised so that they do not, inadvertently, do the wrong thing by their staff.
It is equally important that farm workers know their rights, reduced as they are. For any of them listening, I strongly recommend that if they are not a member of a trade union they quickly join because they will need one more than before as they will have to negotiate their pay and conditions on a case-by-case basis with employers. They will need the advice and support of a trade union to do that effectively. It is also worth noting—this was not something that was in force or that we even knew about when we debated the legislation to get rid of the board—that as of 29 July, this month, workers unfairly dismissed or discriminated against by their employers will be charged a fee for taking their claim to a tribunal. That means, in the absence of the protection of the agricultural wages board, that these typically extremely lowly paid workers will be denied the access to justice of a tribunal unless they are willing to pay a fee, with no guarantee, if the case is found in their favour, that they will get that fee back.
It is worth saying that the law is also changing so that if their employer—who might be their landlord—sidles up to them in the farmyard and makes them an offer to do things slightly differently and change terms and conditions, they would not be able to use that conversation in a tribunal either. That would no longer be admissible. I find that of huge regret, and we were not able to debate it when those orders went through. The changes to their pay and conditions as a result of this order and the new law abolishing the agricultural wages board increase the risk of agricultural workers suffering.
My noble friend Lord Whitty raised the issue of Wales and asked some highly pertinent questions about how this will work given the decision of the Welsh Assembly Government effectively to retain the agricultural wages board in the Principality. I would be very interested to hear how the two will work together. I understand that these regulations were laid before that decision was made by the Welsh Assembly Government, so perhaps there is unfortunate rather than deliberate problems of timing. It will certainly be September before the other place has a chance to debate these regulations. If we do not have a satisfactory answer from the Minister now, we will have to decide whether we want to pray against the regulations or leave it for the Minister to come back with some proper consideration of these matters when they come to the Commons in September. There will certainly be a problem if the agricultural wages board arrangements are to apply in Wales while the changes to leave entitlement are being made in these regulations. The exemptions were put in place in 1998 for a good reason. If they are to apply in Wales while also being changed it will create a problem which the Minister will have to resolve.
So for all the reasons that my noble friend Lord Whitty gave, we are not opposing these regulations as such, subject to some reassurance on the Welsh issue, because they are merely tidying up. However we hugely regret the abolition of the agricultural wages board. I do not think that it has been properly thought through. I think that, in combination with some of the other changes that are taking place, there will be more farm workers who are exploited beyond the few who are exploited at the moment, one example of which I gave from a recent report in the agricultural press.
With those words, I am happy to listen with bated breath to what the Minister will tell us.
I thank the noble Lords, Lord Whitty and Lord Knight, for their contributions. As I said earlier, the amendments we are proposing to the Working Time Regulations are necessary technical amendments to the legislation as a result of the end of the agricultural minimum wage regulatory regime on 1 October, as the noble Lord, Lord Knight, was good enough to acknowledge. The amendments have no impact on levels of protection for agricultural workers and I believe that they are, in themselves, relatively uncontentious. However I recognise that, as the noble Lord, Lord Whitty, said, recent developments in Wales raise certain issues in regard to abolition of the agricultural wages board which noble Lords are rightly interested to hear about.
The Agricultural Sector (Wales) Bill, passed by the National Assembly for Wales on Wednesday last week, would restore a separate agricultural minimum wage regime in Wales. It might be helpful here if I gave noble Lords some explanation about relevant procedural matters.
Under the Government of Wales Act 2006 there is a recognised procedure for the consideration of whether Bills passed by the National Assembly for Wales are within its legislative competence. Essentially, this provides that the Attorney-General and the Counsel General for Wales—either or both—have four weeks after a Bill is passed by the National Assembly in which to decide whether to refer any question of competence to the Supreme Court. After this period, if no referral is made and the Secretary of State for Wales has indicated that he will not use his powers under the Government of Wales Act to intervene, the Bill is submitted for Royal Assent. This applies to all Bills passed by the National Assembly and this is the stage which we have now reached with the Agricultural Sector (Wales) Bill.
My right honourable friend the Attorney-General is currently assessing the legislation to determine whether its provisions are within the Assembly’s competence, as he does with all legislation passed by the Assembly. It would not be right for me to speculate here what conclusion either the Attorney-General, or indeed the Counsel General, might reach. I will say that, as noble Lords are aware from previous debates on this issue, the UK Government regard the agricultural wages regime as wage-setting and employment law, which are subjects that are not devolved to Wales. However, it is for my right honourable friend the Attorney-General and the Counsel General separately to consider whether or not a reference should be made to the Supreme Court on the question of the competence of the provisions of the Welsh Bill. This is a decision for them which it would not be appropriate for me to second-guess. Should either the Attorney-General or the Counsel General for Wales, or both, decide that such a reference should be made, it will be up to the Supreme Court to consider the Bill and make a judgment.
I hope, therefore, that that makes the position clear. There is a statutory procedure to be followed in the case of all Bills passed by the National Assembly and, quite properly, that procedure is now being followed in relation to the Agricultural Sector (Wales) Bill. The noble Lord, Lord Whitty—
The noble Lord effectively asked why we do not wait to press ahead until all this has been resolved. We will not know the outcome of the Welsh position for some time, but we need certainty for people in employment in farming in the mean time. If we did not do this then new employees could effectively be left in limbo.
The noble Lord, Lord Whitty, asked what discussions the Government have had with Welsh Ministers about all of this. There has been extensive discussion with Welsh Ministers about the position of the agricultural wages board in Wales, and Welsh Ministers were informed of the Government’s decision to pursue abolition by the Enterprise and Regulatory Reform Act. The UK Government communicated our view that this was a non-devolved matter which did not require the consent of the Assembly clearly to Welsh Ministers.
The noble Lord, Lord Whitty, reiterated his position when we debated the Act—if I may shorthand it. I understand his position very well. Abolishing the agricultural minimum wage will bring agriculture into line—
Before the Minister moves off Wales completely, I would be grateful to know whether he considered the order applying just to England, so that we would not have this issue. Given that detailed conversations were going on with Ministers in the Welsh Assembly Government, was that an option?
The words I used apply to both England and Wales. That is the point. It would leave those coming into agricultural employment in Wales in limbo as well. We do not want them to be left without certainty as to commencement of leave year and the other things we have been referring to here.
My point is on Wales. Although I recognise the delicacy of the position of the Attorney-General in looking at the question of competence of the Welsh Assembly, in advice going to the Attorney-General presumably the department has made clear the point that I made when the Government made a similar point during the passage of the Enterprise and Regulatory Reform Act: that although the Government have now invented the doctrine that this is employment legislation, since at least 1948, the wages board has been the responsibility of Defra or MAFF, not of whatever department was responsible for employment law. That may not be a clincher for the Attorney-General, but it is an important indication of the approach of previous Governments and in previous legislation—that is, as a matter of agricultural not general employment legislation.
The noble Lord has been around for longer than I have in these affairs. I am absolutely certain that that has been done, but I will reiterate it. He makes a perfectly fair point and I will make sure that it is made again.
Perhaps I may continue with the next series of points. The Government’s position, as noble Lords know, is that abolishing the agricultural minimum wage will bring agriculture into line with other sectors in the economy. Allowing farmers to compete fairly in the labour market and for agricultural wages to follow market levels will enhance the competitiveness of the sector and may increase employment. This will in turn encourage long-term prosperity in rural areas.
Having said that, my experience is that workers, often on highly complex machinery and managing animals, which these days is also a pretty technical affair, are highly skilled and that the market for them is highly competitive. We have been quite clear that there is uncertainty about what the actual impact will be. The costs and benefits are made up of a number of elements, including the potential impact on wages for workers and other terms and conditions and the reduction in employment costs paid to government and others. The reality will, as I said, depend on demand, which evidence shows is increasing.
The real benefits will be from allowing farmers and workers the same flexibility to agree terms and conditions as employers and workers in other sectors of the economy, while ensuring the same levels of protection for workers. As I said in my opening remarks, workers with pre-existing contracts will retain those entitlements, and that is enshrined in legislation. I take the noble Lord’s point about that.
The noble Lord, Lord Knight, made a number of points. I acknowledge what he said about what is covered by the agricultural wages board. Of course he is right. Essentially, he asked why we had not done any back-assessment on the regulations. As we discussed, these are minor, technical amendments to the Working Time Regulations as a consequence of abolition of the agricultural wages board. They do not have an impact on the level of protection for workers, nor do we consider that they will have a significant impact on businesses, so an impact assessment has not been carried out.
The noble Lord asked whether we would be working with employers to remind them of their obligations. We have prepared guidance on the changes for agricultural workers and employers, which we have already shared with stakeholders. That guidance will be published on the Defra website shortly.
The Government firmly believe that the end of the separate agricultural minimum wage regime is in the best interests of the industry. The proposed amendments to the Working Time Regulations are a minor piece of the jigsaw to complete a simplified employment regime across all sectors of the economy. This will provide simplification, transparency and greater flexibility, thereby encouraging investment, growth and job opportunities in the sector, which will benefit both workers and employers. A successful agricultural industry will contribute to the growth of the wider rural economy, which is one of my department’s four key objectives. I beg to move.